Key Takeaways
- Middle East Tensions Surge: Joint U.S. and Saudi strikes on Iran-backed groups in Iraq have triggered an emergency security meeting in Baghdad, stoking fears of a wider regional conflict.
- Hermes Outperforms Estimates: Luxury giant Hermes (RMS) reported Q2 revenue of €4.09 billion, exceeding analyst expectations of €4.07 billion, driven by a 10.2% surge in leather goods sales.
- UK Growth Upgraded Amid Inflation Risk: The NIESR raised its 2026 UK GDP growth forecast to 1.1%, but warned that persistent inflation will likely stay above the 2% target until 2029.
- China Handset Market Slumps: Total smartphone shipments in China fell 15.3% year-over-year in June, signaling a significant cooling in consumer demand for mobile technology.
- Mixed European Indicators: Sweden's Q2 GDP grew by 2.8% year-over-year, while Norway's retail sales rebounded with a 1.8% monthly increase in June following a sharp May decline.
Geopolitical Instability in the Middle East
Iraqi Prime Minister Ali al-Zaidi has convened an emergency meeting of the Ministerial Council for National Security following reports of joint U.S. and Saudi military strikes against Iran-backed militias. The strikes, which reportedly targeted the Popular Mobilisation Forces (PMF), were described by Riyadh as a response to recent drone attacks on Saudi petroleum facilities. This development represents a significant escalation in regional hostilities, occurring shortly after high-level diplomatic meetings in Washington regarding Iranian influence.
Luxury Resilience: Hermes H1 2026 Results
Luxury fashion house Hermes (RMS) continues to defy the broader sector slowdown, posting a recurring operating margin of 41% for the first half of 2026. While Asia-Pacific revenue (excluding Japan) grew by a modest 2.5%, falling slightly short of the 3.2% estimate, the brand's core leather goods division saw double-digit growth. Total recurring operating income reached €3.35 billion, surpassing the anticipated €3.27 billion, as high-net-worth demand remains robust.
UK Economic Outlook and Inflation Persistence
The National Institute of Economic and Social Research (NIESR) has adjusted its 2026 growth outlook for the United Kingdom upward to 1.1%, citing unexpected resilience in the first half of the year. However, the think tank warned that the "last mile" of disinflation is proving difficult, with price growth expected to peak at 3.8% in early 2027. The report suggests that the Bank of England may need to maintain higher interest rates for longer to combat these persistent pressures.
Global Manufacturing and Consumer Trends
In Asia, Japan's machine tool orders for June were finalized at a 52.7% year-over-year increase, reflecting strong global demand for industrial equipment despite a slight dip from preliminary figures. Conversely, China's handset market faced a sharp contraction, with CAICT data showing a 15.3% drop in June shipments. This decline highlights the ongoing challenges for tech manufacturers as consumer replacement cycles lengthen and economic uncertainty persists in the region.
European Macroeconomic Data
European markets received a flurry of data this morning, showing a fragmented recovery. Germany's Import Price Index for May fell 0.7% month-on-month, though it remains 6.1% higher than the previous year, indicating some cooling in imported inflationary pressures. Sweden's economy showed strength with a 2.8% annual GDP increase in Q2, while Norway's retail sector saw a healthy 1.8% bounce-back in June, recovering from a downward-revised May performance.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.